Lazard Cost Data Shows Renewables Still Cheapest as U.S. Power Prices Climb
New Lazard data shows solar and wind retain cost advantages despite 18% cost increases, complicating the affordability argument for new gas build.
The cost of building new wind and solar in the United States is going up, but the technologies remain cheaper than any fossil-fuel alternative, according to Lazard's 2026 Levelized Cost of Energy+ report released Monday (2026-07-13). Unsubsidized utility-scale solar costs rose 18% to $40-$98/MWh, driven by higher capital costs, interest rates, tariffs and supply chain pressures, the analysis found, yet the report still concludes renewables "remain the most cost-competitive form of new-build generation."5
That positioning matters for a U.S. power market where electricity prices have become a political liability. Wind already supplied 10% of U.S. electricity last year, and onshore wind remains the cheapest form of generation to build, per Lazard's data. Cheap new renewables are the one lever utilities have to offset rising rates as data-center demand pushes up power prices and an aging grid strains to connect new supply.6
The cost picture is not what it was. Lazard's latest assessment shows levelized costs rising for all generation types, not just renewables, with conventional technologies carrying higher fuel and variable cost components while renewable projects are dominated by upfront capital expenditure. That capital-heavy structure is exactly why higher interest rates and tariff pressures hit solar and wind harder on paper.6
But the gap remains wide. Even after the 18% increase, utility-scale solar at $40-$98/MWh undercuts the all-in cost of new gas-fired generation, which must factor in fuel price exposure over a 20-to-30-year operating life. The Lazard report's central finding is that the unsubsidized cost advantage of renewables has narrowed, not disappeared.5
The Trump administration's policy posture has done little to slow solar deployment. FERC data show solar additions were the single largest source of new generation capacity last year, and commission projections point to another 86 GW of solar installations over the next three years. That trajectory would push solar past coal in total installed capacity, despite the administration's $700 million plan to revive coal production.3
EDP is betting on that trend continuing. The developer is directing more than half of its capital expenditures, roughly $5.3 billion, toward U.S. renewables projects over the next three years. That capital commitment stands in sharp contrast to offshore wind, where federal policy has pushed developers to abandon projects and financiers have grown wary of a capital-intensive industry facing demonstrable political risk.3
The offshore picture is starkly different from the onshore one. Offshore wind development has all but screeched to a halt in the United States, with the administration making payments to companies to quit projects. Ørsted's Revolution Wind and Dominion Energy's Coastal Virginia Offshore Wind have started producing power while still under construction, but those are exceptions in a sector that has otherwise frozen.1
Dominion has projected its Virginia offshore project will save ratepayers $5 billion in fuel costs over its first decade of operations. The company's technical potential offshore is capable of generating more than five times what the U.S. consumes, but capturing that requires the kind of long-term regulatory certainty the current administration is actively undermining.1
Storage is filling some of the gap left by stalling offshore wind. The United States added 3.3 GW/8.4 GWh of energy storage in the first quarter of 2026, a record across utility-scale, residential and commercial segments, according to Wood Mackenzie and the American Clean Power Association. Storage pairs naturally with the solar buildout, allowing developers to shift afternoon generation into evening peak hours when power prices are highest.4
The grid itself remains a bottleneck. Much of the U.S. transmission system was built around the time of the moon landing, and a large share of in-service distribution transformers are more than 33 years old and approaching end of life. New generation is struggling to connect to a grid that was not designed for the current mix of distributed solar and utility-scale wind.2
The comparison with China is uncomfortable for U.S. policymakers. China deployed 543 GW of new generation capacity in a single year, more than the United States has cumulatively installed since 2008. That pace of buildout is what a serious grid modernization program looks like, and it is not happening here.2
For traders, the Lazard data reinforces that the marginal cost of new U.S. power supply is falling, which caps long-dated power price expectations even as near-term prices spike on data-center demand. The 18% increase in solar costs is a supply-side shock from tariffs and financing costs, but it is not enough to flip the economics back toward gas.5
The unresolved risk is whether tariff and interest-rate pressures continue to erode that cost advantage. Another 18% increase in solar costs would push the top end of the range toward $115/MWh, where gas-fired generation starts to look competitive again in some regions. The next Lazard report will show whether this is a one-year spike or the start of a structural repricing. The FERC solar projections and EDP's capital commitment both assume the current cost curve holds.5